VLO
Valero Energy Corporation
$246.96
Oil & Gas E&P
85%
FCF at Price Deck × Multiple
Moderate
·
Conviction
Overvalued
Trading 22.2% above fair value
You pay
$246.96
Bear
$128.91
Fair
$202.01
Bull
$287.66
Bear
$128.91
-47.8%
FCF $4426M × 10x
Fair
$202.01
-18.2%
FCF $5030M × 13x
Bull
$287.66
+16.5%
FCF $5634M × 16x
Key Value Driver
Oil price assumption ($75/bbl base case)
Implied Market Multiple
16.0x
Summary
Our base-case estimate uses a valuation based on free cash flow under different commodity price assumptions and a valuation multiple. We then blend that result with the average analyst price target of $214.67 from 37 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $202.01 per share.
Warnings
Where you think oil prices will settle long-term drives over 80% of this valuation. The biggest risk isn't the company itself — it's getting the commodity price wrong.
Key Risks
- Growth DCF inappropriate — commodity volumes do not compound
- Geopolitical premiums are real but historically temporary
- Reserve replacement ratio below 100% for 3 years is existential